Limitation of Liability (LoL)

A contractual risk-allocation provision that caps the maximum financial damages one party can recover from the other in the event of a breach, and excludes indirect, punitive, or consequential damages.

Legal Enforceability Under Indian Law

Enforceable under Indian law as a valid commercial agreement on risk distribution. However, liability for fraud, willful misconduct, or death/personal injury caused by negligence cannot be legally capped or excluded.

Standard Sample Clause Language

1. EXCLUSION OF CONSEQUENTIAL DAMAGES: To the maximum extent permitted by applicable law, neither party shall be liable to the other for any indirect, incidental, punitive, or consequential damages, loss of revenue, or loss of profits. 2. AGGREGATE LIABILITY CAP: The total aggregate liability of either party arising out of or related to this Agreement, whether in contract, tort, or otherwise, shall not exceed the total fees paid or payable by Client to Service Provider under this Agreement in the twelve (12) months preceding the event giving rise to liability.

Common Drafting Pitfalls to Avoid

✕Setting an unlimited cap on IP indemnification without insurance coverage.
✕Vague wording that fails to exclude lost profits as consequential damages.
✕Ignoring statutory non-excludable liabilities under Indian consumer or labor laws.

Frequently Asked Questions

What is the standard limitation of liability cap for B2B contracts in India?

Market standard for B2B SaaS and IT services contracts in India is typically 1x to 2x the total contract value (or fees paid in the preceding 12 months).

Related Commercial & Legal Terms

Indemnity Clause →

An indemnity clause is a contractual commitment where one party (the indemnifying party) promises to compensate and hold harmless the other party (the indemnified party) for specified losses, legal claims, damages, or liabilities arising out of a breach or specific event.

Liquidated Damages →

A predetermined, genuine pre-estimate of loss agreed upon by the contracting parties at the time of signing, payable as compensation in the event of a specific contractual breach (such as delivery delay).

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